America’s suburbs — and many areas of larger cities — practice strict separation of uses. They don’t allow commercial activity in residential neighborhoods. The consequence is a shortage of affordable store space for small businesses. So why not allow more stores in residential areas, including ones run from homes? Well, there’s growing momentum to do just that, as Accessory Commercial Units (ACUs) are becoming a new tool for making U.S. cities more livable.
If this sounds familiar, it may be because you’ve heard of accessory dwelling units (ADUs). These include garage apartments, basement apartments, backyard cottages, and other small living units that complement a main house. In recent years, various cities have pushed to increase housing supply through ADUs without excessively changing the character of single-family neighborhoods.
ACUs are the business equivalent, and permitting more of them could increase local commerce and reduce car trips. It would improve the urban form to better embody how we once built cities. A leading ACU advocate is Neil Heller, a Portland area planner who has championed their expansion ever since COVID-19 increased the number of professionals working from home. Heller has collected images of ACUs throughout the country.
Like ADUs, ACUs are smaller than the adjoining structure on site, and thus can be cheaper to build than conventional commercial structures. As Garlynn Woodsong notes in an essay in Public Square, their widespread legalization would drastically lower barriers for small business formation.
“All of a sudden, the incremental price of a new business could be reduced from, say, $400,000 or above, by an order of magnitude, to as little as the $10,000 cost of bringing in a shipping container, trailer, camper, prefab shed, or other space sufficient to house a small new business,” Woodsong writes. ACUs also have less stringent fire safety requirements, as structures can more easily be protected by a firewall.
ACUs are common enough in developing nations that they don’t need a technical legal name. In Mexico, for example, ACUs are just a fact of life on nearly every block — with everything from auto repair shops to taco stands emanating from people’s homes.
But in most U.S. cities, ACUs are largely banned thanks to separated use zoning and strict lot size rules, with their rare appearance often owing to grandfather clauses. Even where they are allowed, the scale and range of permitted business types is limited because of case-by-case approval.
However, ACUs have been legalized in some markets, such as Portland, New Orleans and Minneapolis. Raleigh, N.C., is proposing to amend its zoning code to allow them in all neighborhoods of the city currently zoned exclusively for residential uses, with some constraints on number of employees and maximum customer occupancy. Under the proposal, ACUs could be used for offices, restaurants, and service-oriented businesses like hair salons.
Raleigh’s move won’t transform the scale of single-family neighborhoods. ACUs will need to conform with design rules; and units must be capped at either 1,000 square feet or 40 percent of the adjoining structure’s floor area, whichever is less.
Predictably, the move is attracting opposition — one local blogger calls it an attempt to destroy residential zoning in the city. Indeed, there remains stringent opposition to mixing uses in residential areas generally. While not addressing ACUs explicitly, a proposed zoning change in Washington, D.C., early last decade would have allowed more retail in residential neighborhoods. But the measure was scaled back in 2013.
Others see benefits. Heller argues that ACUs are inherently less intrusive than most businesses would be in a single-family neighborhood context, and the large land setbacks within most suburban properties provide ample space for them. Perhaps the key is for cities to pass legislation that, as in Raleigh, limits square footage or customer occupancy numbers. While opponents might be imagining a nightmare scenario in which gas stations get built on their corners, such a bill, in reality, would more likely give them a charming neighborhood coffee shop.
In any case, the time for ACUs has come. They would help the rising number of remote workers who spend their days in residential areas and need places to do errands. They would help small business owners find cheaper working space. They would reduce the number of automobile trips. And above all, they would restore an urban form that many people remember fondly and will even pay a premium to live around. New York City is beloved for its corner stores, just as Portland is for its in-house pubs. But most of America makes it illegal to replicate that.
Scott Beyer owns and manages The Market Urbanist.
Market Urbanist is a media company that advances free-market city policy. We aim for a liberalized approach that produces cheaper housing, faster transport and better quality-of-life.
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